API: New EPA Gasoline Regulations Costly, Counterproductive

According to the American Petroleum Institute (API), the U.S. Environmental Protection Agency's new Tier 3 rule requiring the last bits of sulfur to be removed from gasoline will unnecessarily raise costs and actually increase carbon dioxide emissions at U.S. refineries because of the energy-intensive hydro-treating equipment needed to meet the new standard.

"This rule's biggest impact is to increase the cost of delivering energy to Americans, making it a threat to consumers, jobs and the economy," said API Downstream Group Director Bob Greco. "But it will provide negligible, if any, environmental benefits. In fact, air quality would continue to improve with the existing standard and without additional costs."

The new rule could require $10 billion in capital costs, according to a study by Baker and O'Brien. The annual compliance cost is $2.4 billion, equating to a potential cost increase of between 6 cents and 9 cents per gallon of gasoline produced. The new sulfur standard of 10 parts per million would “yield only very small additional improvements” in air quality, according to analyses by Environ.

"Besides the enormous costs and negligible environmental benefit, we are also concerned about the timeline of the EPA's new rule," Greco said. "The rushed timeframe leaves little opportunity for refiners to design, engineer, permit, construct, start up and integrate the new machinery required. This accelerated implementation only adds costs and potentially limits our industry's ability to supply gasoline to consumers."